1. Technical Field
The present invention relates generally to an improved communications system and in particular, to an improved method and apparatus for facilitating financial transactions within a communications system. Still more particularly, the present invention provides an improved method and apparatus for completing financial transactions involving credit cards.
2. Description of the Related Art
Recent advances in technology have resulted in unprecedented growth and diversification in the field of communications. Communications systems, long used for transmitting voice signals between telephones, are now being implemented in a wide variety of other applications. Such applications include, for example, the transfer of information between local area networks (LANs) and the transmission of documents via facsimile. The wide variety of available communications applications has resulted in a marked increase in the use of communications systems.
Communications system use has also increased as a result of the greater number of telephone devices now available. With the advent of devices such as portable and cellular telephones, more people spend a greater amount of time in telephonic communication than in the past.
These factors have contributed to a general increase in the use of communications systems and, in particular, to an increase in the use of communications systems for sending long distance and international transmissions. The dramatic social and economic changes which the world has undergone in the past several years have also resulted in the increased use of long distance and international communications systems. The current socioeconomic climate of the world suggests that the number of long distance and international transmissions will continue to grow at an increased rate.
In particular, financial transactions made through communications systems have increased by large amounts. Specifically, consumers are able to purchase goods and services over the telephone using a credit card. With the increase in credit card sales, credit card fraud also has risen. When made in person, credit card transactions require a valid credit card number, expiration date, and a signature, matching the signature on the back of the credit card. Furthermore, some credit card providers have provided photo identification on the credit card itself to help ensure against fraudulent use for in person transactions. As with in person transactions, financial transactions, involving a credit card, conducted over the telephone require both a credit card number and an expiration date. Unlike in person transactions, credit card transactions made over the telephone do not require a signature. As a result, criminals who make fraudulent credit card transactions only need to give the credit card number and expiration date to a merchant, ask for next day delivery, and watch for the merchandise to arrive at an unsuspecting address. This type of theft is particular easy if the criminal knows that the merchant ships the merchandise to the billing address of the cardholder and the cardholder is not present at the billing address during delivery hours.
When a telephone transaction requires a personal identification number (PIN), the PIN is disclosed to the merchant so that the transaction can be completed. In FIG. 1, consumer 10 is in telephonic contact with merchant 12 and establishes a transaction for the purchase of goods or services from merchant 12. To validate the credit card number for consumer 10, merchant 12 is required to send the credit card number and a PIN to credit card validation service (CVS) 14, which determines whether the credit card number is valid for the transaction. Credit card validation service 14 will return an indication to merchant 12 as to whether the credit card number is valid. Upon receiving an indication, merchant 12 can complete the transaction with consumer 10. The use of a PIN allows for more security in credit card transactions made over the telephone. This security, however, is still limited because consumer 10 must provide the PIN to merchant 12. Under this process, a large number of merchants have access to the credit card number and PIN of consumer 10, increasing the chances of the credit card number and PIN being used for fraudulent purposes.
Therefore, it would be advantageous to have an improved method and apparatus for facilitating financial transactions involving credit cards without the weaknesses of the presently available systems.